BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1910
                                                                  Page  1

          Date of Hearing:   April 14, 2010

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

            AB 1910 (Committee on Agriculture) - As Introduced:  February  
                                      16, 2010 

          Policy Committee:                              AgricultureVote:8  
          - 0 

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              

           SUMMARY  

          This bill requires that the Secretary for the California  
          Department of Food and Agriculture (CDFA) exhaust all  
          administrative and legal remedies against a milk handler who is  
          defaulting on his or her payments to the milk equalization pool  
          prior to recommending the transfer of money from the Milk  
          Producers Security Trust Fund to cover the defaulted payment.

           FISCAL EFFECT  

          Costs associated with this legislation would be minor and  
          absorbable within the Milk Producers Security Trust Fund. 

           COMMENTS  

           1)Rationale  . AB 1910 is intended to clarify the role and duty of  
            CDFA regarding taking action against the trust fund.  The  
            industry states their intention that the trust fund be a  
            fail-safe for producer's payments, but not a catch-all for  
            them.  A processor may not pay the Milk Pool (Pool) for  
            reasons other than bankruptcy or default.  CDFA has  
            alternative means for seeking collection of such revenues and  
            penalties and CDFA should use all legal remedies to collect  
            payment.  The creation of the trust fund was not intended to  
            replace those options by CDFA.  This bill is intended to  
            clarify that intent.

           2)Milk Equalization Pool  . The California Milk Pooling Program  
            was established in 1967 as the Gonsalves Milk Pooling Act  
            (Act) to address concerns within the milk industry of  








                                                                  AB 1910
                                                                  Page  2

            equitable prices among dairymen for similar milk. The Act was  
            put into place to end destructive trade practices within the  
            industry. The practices of primary concern were those of  
            handlers who demanded kickbacks from dairymen in order to  
            obtain a contract to ship milk to their processing plant. 

           3)Milk Producers Security Trust Fund  . The trust fund was created  
            in 1987 in response to the bankruptcy by Knudsen Foremost, at  
            the time, the state's largest milk processor.  That bankruptcy  
            caused California dairy farmers to lose roughly $36 million.   
            The purpose of the fund is to cover milk producer payments in  
            the event of a processor payment default.  

           Analysis Prepared by  :    Julie Salley-Gray / APPR. / (916)  
          319-2081